Question

a. Explain in writing and with a graph how markets where production generates pollution will fail...

a. Explain in writing and with a graph how markets where production generates pollution will fail to produce the efficient amount of the good that causes pollution.

b. How might government intervene to improve on this outcome? Explain.

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Ans) Negative externality is when the bystander bears the cost of any activity. Here, social cost is more than the private cost. The difference between social cost and private cost is known as external cost. When this external cost is ignored, goods are overproduced in the market. This causes market failure. That is, free market fails to achieve socially optimal outcome. Eg÷ pollution.

To internalise this externality, government imposes tax equal to external cost. This reduces the supply and brings market quantity equal to socially optimal quantity.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Throughout this course we have talked about how governments can intervene in creating markets that achieve...
Throughout this course we have talked about how governments can intervene in creating markets that achieve an efficient and equitable level of environmental quality. Discuss five ways where government intervention could yield a more efficient or equitable outcome. For each type of government intervention: describe how the governments can improve environmental quality and achieve an efficient outcome. why only governments can be successful in making these improvements. Use economic arguments. We all know that governments play a major role in...
Inefficient Environmental Policy Consider a city where each polluting firm initially generates two tons of pollution....
Inefficient Environmental Policy Consider a city where each polluting firm initially generates two tons of pollution. Half the polluters (type L} could cut Pack pollution at a cost of $4 per ton, and the other half (type H) could cut Pack at a cost of $30 per ton. The city is considering two alternative environmental policies: i. Pollution tax: Each firm would pay a tax of $5 for each unit of pollution. ii. Uniform-reduction: Each firm would Pe required to...
Question 26 26) Free markets fail when: a. there are externalities present in the market b....
Question 26 26) Free markets fail when: a. there are externalities present in the market b. they fail to provide public goods and services in the amounts society wants c. they fail to provide private goods and services in the amounts that society wants d. all of the above 3 points Question 27 27) When negative externalities are present in a market: a. too much of the good or service is produced b. an external cost is imposed on others...
There are three firms in the car production industry, where the production of cars gen- erates...
There are three firms in the car production industry, where the production of cars gen- erates pollution. All three firms have the same damage function: each additional unit of emissions damages society $15. However, all three firms have different abatement technologies. The marginal abatement cost is 5 + 0.2A for Volvo and 5 + 0.25A for Ford. Finally, the marginal abatement cost for Toyota is A − 5, where A is abatement. All three firms only care about maximizing profits...
Consider a market where the demand curve is given by P = 200 – 0.2Q and...
Consider a market where the demand curve is given by P = 200 – 0.2Q and the supply curve is given by P = 50 + 0.1Q. Production of this good generates an external cost as measured by the marginal external cost function MEC = 0.1Q. If the government wants to encourage firms to produce at the socially efficient level of output then how large should the per unit tax be?
Explain how markets carry information and create incentives. Describe an example where prices change people's behavior...
Explain how markets carry information and create incentives. Describe an example where prices change people's behavior in efficient manners. Make sure to use the correct vocabulary to describe how markets adjust to carry information and create incentives.
Slipshod Plastic Corp. produces both plastic materials and water pollution. Suppose that Slipshod currently produces 30...
Slipshod Plastic Corp. produces both plastic materials and water pollution. Suppose that Slipshod currently produces 30 gallons per minute of polluted water. Company officials estimate that the marginal cost of reducing pollution is: MC(h) = 40 - h, where h is measured in gallons of polluted water per minute. Health officials estimate that the marginal benefits of reducing emissions from Slipshod are: MB(h) = 3h (a) What would be the level of per unit tax on pollution that would yield...
There are three firms in the car production industry, where the production of cars gen- erates...
There are three firms in the car production industry, where the production of cars gen- erates pollution. All three firms have the same damage function: each additional unit of emissions damages society $15. However, all three firms have different abatement technologies. The marginal abatement cost is 5 + 0.2A for Volvo and 5 + 0.25A for Ford. Finally, the marginal abatement cost for Toyota is A − 5, where A is abatement. All three firms only care about maximizing profits...
There are three firms in the car production industry, where the production of cars gen- erates...
There are three firms in the car production industry, where the production of cars gen- erates pollution. All three firms have the same damage function: each additional unit of emissions damages society $15. However, all three firms have different abatement technologies. The marginal abatement cost is 5 + 0.2A for Volvo and 5 + 0.25A for Ford. Finally, the marginal abatement cost for Toyota is A − 5, where A is abatement. All three firms only care about maximizing profits...
QUESTION 2 Government intervention that aims to promote technology-enhancing industries is called a. industrial technology assistance....
QUESTION 2 Government intervention that aims to promote technology-enhancing industries is called a. industrial technology assistance. b. intervention policy. c. assisted technology. d. industrial policy. 4 points    QUESTION 3 Which of the following statements is not correct? a. Government policies may improve the market's allocation of resources when negative externalities are present. b. Without government intervention, the market will tend to undersupply products that produce negative externalities. c. Government policies may improve the market's allocation of resources when positive...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT